‘Fire and rehire’ under spotlight

A basic rule of contract law is that any change in contract needs to be agreed by both parties, and unless there is a specific pre-agreed clause allowing unilateral changes, no one party can change the terms of the contract. If a change is sought then one party will need to end the contract (give notice) and then, if both parties want to, start a new contract.

The relationship of a worker with an employer is rooted in that the idea of contract and as such employment law has traditionally come to be seen as dependent on these ideas. And this is where the idea of of fire and rehire comes from. If an employer (let’s, to pull a name out of that air, call them ‘Tesco’) advertises a role at £15,000 a year and appoints someone on that amount then, under the employment contract, ‘Tesco’ must continue to pay that employee £15,000 for so long as they employ her under that contract. But, anxious to put a few extra pennies in the pockets of their ‘Tesco’s’ hardworking and impoverished shareholders, ‘Tesco’ decides that £15,000 is really too generous and that a fair wage is just £11,000. So ‘Tesco’ gives the employee notice of dismissal telling them that they will be dismissed (the fire) but, because because they really are the compassionate face of capitalism they offer to the worker to reemploy them on the reduced salary (the rehire). The conventional logic is that this is entirely legal because all contractual formalities have been kept, there is no unilateral contract change but instead, one contract is ended and another new one is immediately started.

This underpinning of the employment relationship upon contract is grossly unequal It is a myth that for most of us the employment relationship is the result of a fair bargain between two parties with equal bargaining power, it is one where the prospective employer holds all the cards. It is for that reason that the law has added non contractual based protections to employees have been added to the employment law landscape (the most well known is the idea of unfair dismissal).

Some years ago I encountered just this situation. I was employed by a moderately sized employer the Nursing and Midwifery Council, without much warning they advised all staff (just after they had awarded the CEO a huge payrise I might add) that unless staff agreed to negative changes to their contract they would be dismissed and rehired. It is testament to that inequality that (so far as I am aware) just one employee refused to the negative change (me) – although I jumped before I was pushed. So, by the power of the inequality each employee, except the CEO, was left with worse terms and conditions.

The strategy of Fire and Rehire has come under the spotlight in recent weeks, and it is good to see that the campaign against its use is gaining some traction.

Last month there were news reports that a Scottish court had granted an interim application by the USDAW union to restrain Tesco from implementing its plan to cut workers’ wages by at least £4,000 a year. I have not been able to obtain a copy of the reasons but any appeals will be very interesting to follow.

More broadly, under cover of the covid-19 pandemic numerous large employers, notably British Gas, Tesco, and British Airways have sought to use what even the Tory PM Boris Johnson described in December 2020 as an ‘exploitative tactic. It is good that unions have been collectivising that issue and that members have supported their unions in voting for strike action to resist such actions.

Yesterday Unite launched a campaign to change the law to introduce specific legislative prohibitions against fire and rehire, a campaign I am sure the whole trade union will get behind in the coming months.

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